Opinion
CA No. 3:01-CV-481-R.
August 2, 2001.
MEMORANDUM OPINION AND ORDER
Plaintiff Lawrence Warfield, in his role as Receiver (the "Receiver") for Dennel Finance Limited ("Dennel"), has asserted claims against the Defendants for recovery of Receivership Assets. Now before this Court is Marvin Beckman ("Beckman"), Nacoma Limited Partnership ("Nacoma"), and Noroni, LTD's ("Noroni") (collectively the "Beckman Defendants") Motion to Dismiss or in the Alternative, Motion to Transfer Venue, filed June 28, 2001. For the reasons stated below, the Beckman Defendants' Motion is DENIED.
I. BACKGROUND FACTS
This case involves the Dennel investment program, which was operated by Benjamin Cook ("Cook") as a fraudulent Ponzi scheme. As part of these proceedings this Court appointed the Receiver to recover assets to return them to the defrauded investors. The Receiver alleges that in exchange for percentage payments the Beckman Defendants acted as facilitators in recruiting investors for Dennel. These percentage payments were Dennel investor funds rather than earnings on investments, and therefore they constitute Receivership Assets. After the Beckman Defendants failed to comply with the Receivership Order to turn over the percentage payments, the Receiver instituted this suit to recover the funds. The Beckman Defendants argue that the case should be dismissed because this Court lacks jurisdiction over them.
Beckman alleges he has no contacts with Texas. He owns no property in Texas, nor does he have clients or an interest in any businesses in Texas. He has resided in Arizona for the past thirty years.
Beckman was introduced to Dennel through Peter Shifman ("Shifman") another Arizona resident. Shifman introduced Beckman to Cook who Beckman also understood to be a resident of Arizona. The meetings regarding the Dennel program took place in Arizona, and Beckman never traveled to Texas for business related to Dennel. Furthermore, none of his clients involved with Dennel resided in Texas.
Nacoma is an Arizona limited partnership created for the estate planning needs of the Beckman family. Nacoma's purpose is to hold assets for the Beckman family, and it holds no assets in Texas.
Moroni is a corporation of the nation of Dominica. It owns no assets in Texas and has had no dealings with Texas.
II. LEGAL ANALYSIS
A. Personal Jurisdiction
In Federal Trade Commission v. Jim Walters Corporation, the Fifth Circuit held that "due process requires only that a defendant in a federal suit have minimum contacts with the United States." 651 F.2d 251, 256 (5th Cir. 1981). The Jim Walters opinion, which established a national minimum contacts test, based its holding on the grounds that personal jurisdiction arises "out of the limitations inherent in concepts of sovereignty." Id.
The Supreme Court, however, has rejected part of this analysis and held that the requirement of personal jurisdiction protects an individual liberty grounded in the Due Process Clause rather than notions of sovereignty. Insurance Corp. of Ireland. Ltd. v. Compagnie des Bauxites, 456 U.S. 694, 701 (1982). Even under this guiding rationale, the Fifth Circuit maintains that the holding of Jim Walters remains because, although the due process clause must be satisfied, sovereignty defines the scope of the due process test. Accord Busch v. Buchman, Buchman. O'Brien, Law Firm, 11 F.3d 1255, 1257-58 (5th Cir. 1994).
Where a state attempts to establish extraterritorial jurisdiction over a defendant, the party must have had minimum contacts with the forum and maintenance of the suit in the forum cannot offend traditional notions of fair play and substantial justice. Asahi Metal Indus. v. Superior Court of Calif., 480 U.S. 102, 113 (1987). When a federal court attempts to exercise personal jurisdiction over a defendant in a suit based upon a federal statute providing for nationwide service of process, the relevant inquiry is whether the defendant has had minimum contacts with the United States. Busch, 11 F.3d at 1258. Furthermore, if the relevant sovereign is the United States, it does not offend the traditional notions of fair play and substantial justice to exercise personal jurisdiction over a defendant residing in the United States. Id.
The Fifth Circuit has since criticized its conclusion that the proper personal jurisdiction test in a national service of process case is whether minimum contacts exist between the individual and the national sovereign. Bellaire General Hospital v. Blue Cross Blue Shield of Michigan, 97 F.3d 822, 826 (5th Cir. 1996). Despite these criticisms, however, theBellaire court applied the Busch standard, which remains binding precedent in the Fifth Circuit. Id.
1. Marvin Beckman
Beckman, a resident of the United States, has been served pursuant to 15 U.S.C. § 78aa, which authorizes national service of process. Under the Busch rationale, Beckman's United States residency destroys any due process concerns, and the traditional notions of fair play and substantial justice will not be offended by this Court's exercise of personal jurisdiction. See Busch, 11 F.3d at 1257-58. Thus, this Court may exercise personal jurisdiction over Beckman.
2. Nacoma Limited Partnership
Similar to Beckman, Nacoma has been served pursuant to 15 U.S.C. § 78aa and the corporation is a resident of the United States. The corporation's residency suffices to create minimum contacts and therefore, under the statute authorizing national service of process, this Court may assert personal jurisdiction over Nacoma. See id. Further, as in Beckman's case, notions of fair play and substantial justice are not offended by the Court's exercise of jurisdiction over Nacoma.
3. Moroni, LTD.
Moroni is a corporation of the nation of Dominica and has no contacts with Texas. The corporation, however, was allegedly involved with the Dennel scheme. As an alleged facilitator to the United States based Dennel program, Moroni allegedly solicited new investors, handled the dissemination of information to these potential investors, and assisted investors in placing their funds into the scheme. Moreover, Moroni allegedly received several wire transfers from Dennel in United States currency, which consisted of funds from United States investors. These activities suffice to create minimum contacts with the United States and therefore, this Court may assert personal jurisdiction over Moroni. Again, notions of fair play and substantial justice are not offended by the Court's exercise of jurisdiction over Moroni.
B. Venue
The decision to transfer venue under 28 U.S.C. § 1404(a) remains within the sound discretion of the Court. Factors the Court should consider in deciding whether to transfer venue are the: (1) availability and convenience of witnesses and parties; (2) location of counsel; (3) location of the alleged wrong; (4) location of books and records; (5) cost of obtaining the attendance of witnesses and other trial expenses; (6) possibility of delay and prejudice if the transfer is granted; (7) plaintiff's choice of forum, which is entitled to deference.Lebouef v. Gulf Operators. Inc., 20 F. Supp.2d 1057, 1059 (S.D.Tex. 1998) (citations omitted).
Here, the Beckman Defendants allege that several undisclosed witnesses reside in Arizona rather than Texas. However, no supporting documentation is provided for this broad assertion. Where the moving party makes only a general allegation that certain witnesses are needed, without identifying them or the substance of their testimony, the motion must be denied. See Young v. Armstrong World Indus., Inc., 601 F. Supp. 399, 401-02 (N.D.Tex. 1984).
The Beckman Defendants further claim that maintenance of the suit in Texas would impose a significant financial hardship. There are, however, no specific facts to support this assertion. The Defendants must prove these facts with particularity or the motion must be denied. See id.
Moreover, the present action is one of several related to the Dennel scheme. This Court has dealt extensively with this litigation and is familiar with the claims. To transfer this action to another venue would unnecessarily create a steep learning curve for the new court and thereby delay the proceedings. Therefore, without persuasive evidence that continuing to litigate this case in Texas would impose a serious burden upon the Beckman defendants, and because the Receiver's decision as plaintiff to file in Texas should be granted deference, this Court will not transfer venue of this case.
III. CONCLUSION
For the foregoing reasons, the Beckman Defendants' Motion is DENIED.